Oldfield and Santomero (1997,p3) explains the appropriateness to begin the discussion of the place of risk and risk management in the financial sector with the two key issues, viz., why risk matters and what approaches can be taken to mitigate the risks that are an integral part of the sector’s product array. Understanding these two issues leads to a greater appreciation of the nature of the challenge facing managers in the financial …show more content…
Flat and high interest rates has left the company with few viable options. Many companies have been finding it difficult to borrow from banks due to high interest rates and as a result most firms are closing down. This has been witnessed on the stock exchange as more companies were delisted and few being enlisted. This has led to ZB Life being exposed to narrow choice on the investments on equities thereby reducing the investment income of the company.
ZB Life has invested most funds in the money markets as the IPEC report June 2014, shows an increase of 17% in money markets investments while equities, prescribed assets and fixed properties investments were on the decline. ZB Life strategy in handling interest rate risk has been the best decision basing on the performance in the markets. High interest will offer them an increase in the investment income from money markets and this has been the best for the company in concentrating in particular investments.
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